We always mention that car insurance is a sub-section, or part, of short term insurance. But what is short term insurance really? When dealing with insurance we refer to short term and long term insurance. The terms can actually be confusing as I intend to always have car insurance, no matter what car I am driving at the time, so I would call than long term insurance…but it’s not.

Long term insurance refers to life and disability insurance, it also includes investment policies. Long term insurance is insurance against something that is definitely going to happen sometime in the future: you are going to die, or you are going to retire one day and need to provide for that happening. Short term insurance is taking out cover against something that may or may not happen. Examples are:  your car may be stolen, you may be involved in an accident, your car may catch fire and burn out. None of these incidents can be predicted with any kind of certainty; that is why you take out insurance against the risk or possibility of that happening.

Short term policies also run for specific periods of time, even if you always have car insurance, every time you buy a new car you enter into a totally new contract. Also, your car insurance contract comes up for renewal each year, even though you, or the insurance company has the right to cancel the contract at any time by giving the other party notice. Short term insurance also deals with material things, such as a car, a house and the contents of your house.